During periods of economic decline or stagnation, consumers and businesses alike typically increase balances on credit accounts. For example, revolving credit accounts like credit cards generally permit an account holder to purchase goods and necessities using a credit line associated with a finance charge. The finance charge may be applied as an annual percentage rate (APR) on a monthly billing cycle. Unfortunately, however, during adverse economic periods, an account holder may miss one or more payments or be forced to select which accounts are paid while others remain unpaid. Unfortunately, such actions are harmful to the both the account holder and the financial institution that extended the account to the account holder. The account holder's credit rating may be adversely impacted and the financial institution may have to take a “charge off,” where the credit balance on the account is written off as a loss.
Prior attempts to minimize the impact of harsh economic conditions on credit accounts often focused on reducing charge-offs, however, did not adequately address the economic realities facing the credit account holder. For example, one prior attempt focused on reducing the minimum payment amount for a billing period. For example, if a credit account had a $200 minimum payment amount to be paid for the next month (billing period), the minimum payment may have been adjusted to require that the account holder pay only $150. Although such attempts reduced the monthly expenditure by $50, they often did not assist the account holder in reducing the account balance. Specifically, the finance charges absorb a larger portion of the payment, thus the credit balance declines at a slower pace (or may even stay the same). Despite being a popular approach, it often causes the financial institution to have a charge-off and an adverse effect on the credit account holder's credit rating.
New systems and methods that reduce charge-offs could permit the financial institution to extend credit or otherwise assist other credit account holders during periods of economic turmoil. Further, the account holder may retain a desired credit rating (or at least minimize any adverse impact to his/her credit rating). For this and other reasons, systems and methods that alleviate some or all of the negative aspects of prior art systems would be beneficial to the art.